Early Pottstown schools budget shows 3% tax hike

POTTSTOWN — A tax hike of just under 3 percent would balance next year’s proposed $54.6 million school budget Business Manager Linda Adams has told members of the school board.

Adams briefed the board’s finance committee on the state of the budget draft on March 13.

She said the $856,058 deficit between anticipated revenue and expenditures could be closed exactly by raising property taxes by 1.1062 mills, or 2.9 percent, which also just happens to be the maximum allowed by the state-imposed index.

School board member Andrew Kefer expressed amazement that district’s deficit is an exact match for index’s tax hike. “Wow, that’s some coincidence,” he said.

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For a home assessed at $75,000, the borough average, the potential tax increase works out to $81.86 per year.

Adams told the board members that earned income tax revenues are up by $150,000 and real estate tax revenues are up by more than $400,000. “We are seeing some earnings increasing,” she said.

Combine that with a $1.5 million anticipated increase in state funding and a $231,930 increase in federal funding and things start to look pretty good for the upcoming budget — until you put those revenue hikes up against the off-setting $2,875,315 increase in expenses, she said.

Overall, the district is anticipating an increase in state aid based on Gov. Tom Corbett’s proposed budget, but Superintendent Jeff Sparagana said the picture is not quite as rosy as it seems.

Firstly, there is the $1.2 million increase in pension expenses anticipated for the coming school year.

Also, he said, the state grant programs Corbett has proposed are more flexible than the Accountability Block Grants they replace, “but in reality its still not enough to cover our kindergarten costs. It’s not really free money, it’s replacement money,” said Sparagana. “It’s irritating, because its just smoke and mirrors,” he said.

Adams said one of the increased expenses in the draft budget is a $1,257,000 increase in bond payments.

On Thursday, the board is expected to vote on the second half of the borrowing to pay for the renovation and expansion of the three remaining elementary schools — a $6.5 million bond.

Because older debt is being paid off in the coming years, bond payments will stay at that level for several years, said Adams.

The 2014/2015 school year “is the year you have to start paying for the elementary school work,” Adams said, adding, “we can cover that increase by raising taxes to the index. That is the price of our upgraded elementary buildings.”

However, some members of the board hinted at another budget scenario — one that involves a smaller tax hike, or no tax hike at all.

Adams told the finance committee that “I understand the board also wants to see a budget with (a) zero” tax hike, at which point she was interrupted by School Board President Judyth Zahora who said — “No. We didn’t have five votes for that request.”

But several board members indicated there may also not be votes for a 2.9 percent tax hike.

“A resourceful superintendent and business manager would allow for all possibilities,” said school board member Thomas Hylton.

Sparagana told the board “we have looked at zero.”

However, the information the administration subsequently presented was not suggestions on ways the budget could be balanced without raising taxes, but rather how much money the district would ultimately lose over the coming years if taxes are not raised to the index in the next budget round.

According to the chart the administration distributed at the meeting, failing to raise property taxes to the district for the coming school year would have a cumulative impact of more than $7.6 million in revenues lost by the 2018/2019 school year.

Hylton subsequently passed around a six-page document looking at historical expenditures in the district, as well as comparing Pottstown’s spending to other districts in Pennsylvania.

Hylton also referred to a recent trip taken by Pottstown school officials to meet with officials from the Lebanon School District and used figures from there to show that Pottstown — which has fewer students and a lower proportion of low-income students than Lebanon — has nearly twice as many special education aides and special education teachers-per-student as Lebanon.

“If you’re looking to eliminate aides, a lot of them are mandated by law,” board member Polly Weand told Hylton, to which he replied that Lebanon, which has more special education students than Pottstown, seems to get by legally with less.

Sparagana noted, however, that “there is a significant difference in performance” and test scores between Pottstown and Lebanon.

He also noted that Pottstown is located “in the richest county in the state with a challenged tax base and the cost of doing business here is higher than in Lebanon.”

The Pottstown School Board has already voted to stay within its index and not seek any of the “exceptions” to staying within that limit — one of only four districts in Montgomery County to do so.

As a consequence, Pottstown is not required to adopt and advertise a preliminary budget as early in the budget cycle as other area districts have had to do.

About the Author

Evan Brandt has worked for The Mercury since November 1997. His beat includes Pottstown, the surrounding townships and the Pottstown and Pottsgrove school districts, as well as other varied general topics like politics, the environment and education. Reach the author at ebrandt@pottsmerc.com
or follow Evan on Twitter: @PottstownNews.